The many benefits of motor insurance

Any unexpected expense can disturb the finely-balanced budget of middle-class individual. That's when a motor insurance policy comes as a saviour, says Mukesh Kumar, Executive Director, HDFC ERGO General Insurance Company Limited

Unlike earlier days, more people own their personal vehicles today -- be it a scooter, a motorcycle or a car. While Sport Utility Vehicles (SUVs) are getting popular among the well-to-do population in India, businesses rely heavily on commercial vehicles. For better or worse, the number of vehicles plying on Indian roads is increasing -- helped by rising incomes and softening global crude oil prices. 

While some prefer to ride two-wheelers due to their swifter movements and easy parking, a personal car remains the most desirable mode of transport, especially for businesses and families. However, ownership of a personal vehicle is a double-edged sword. While it is a means of convenience for regular travels, even a small mishap while driving can prove to be disproportionately costly for the owner of the car.

You may get involved in a small accident where your car suffers a minor dent, the cost of repair of which may run into a few hundred to a few thousand rupees. With a number of other mandatory expenses, a dent in the car can also put a dent on your monthly budget. Imagine a situation in which the damage to the car due to the accident is major one, or it may even involve damage to the health or property of someone else. Your liability as an owner and the driver of the car is, technically, unlimited.

Hence, it is important that all precautions are taken to ensure that the travel is as safe as possible. The best protection that takes care of your financial liabilities in the event of an unfortunate mishap with your vehicle is motor insurance. Most non-life insurers offer motor insurance policies for different types of motorised vehicles. While the basic coverage is the same for the motor insurance products, additional benefits are offered for different types of motorised vehicles.

With great powers, they say, come great responsibilities! After acquiring your vehicle, you must promise yourself to fulfill your responsibility of driving safe. But despite care you take while driving your motor vehicle, the risk of accidents don’t disappear. Mishaps may happen due to other person’s mistake, too. As an owner, it is your basic responsibility to get your vehicle insured.

A standard motor insurance is designed to cover any damage or loss due to accidents, riots, strikes, fire, natural calamities such as floods, cyclones, earthquake, etc. The motor insurance coverage is applicable while the car is being used on the road, or being transported by rail, sea or air.

Apart from the vehicle itself, a motor insurance policy also covers the people travelling in the vehicle. The personal accident cover under the motor insurance covers the owner/driver of the car. The third-party liability insurance comes into play if the moving vehicle causes injury or death to another person. Also your motor insurance also covers the damage caused to another individual’s automobile or property by your vehicle.

These are the basic covers provided by a standard motor insurance policy. Additional roadside assistance coverage is also available. This will apply for any repair that happens due to minor breakdown, flat tire, lockout because of lost key, emergency fuel and towing to the nearest garage.

In addition to the above, you can enhance your motor insurance coverage further with add-ons such as depreciation cover, personal accident cover, hospital cash, medical expenses and invoice price cover. While each of these add-on coverage increases the insurance premium slightly, they provide a comprehensive protection if something unexpected happens on the road. Opting for cashless coverage helps you get all the help without having to pay anything when getting the vehicle serviced in a garage, that fall under the insurer's network.

However, it is worth noting that there are certain conditions that are not covered under any motor insurance. Any damage due to depreciation/wear and tear of the vehicle; breakdowns such as mechanical and electrical; and damages that occur outside India are not covered. If damage is caused by a driver who is under the influence of alcohol, then motor insurance is not applicable; also if the car is being driven by an unauthorised person who does not possess a valid driving license, the damage to the vehicle is not compensated by the insurer. Motor insurance is not applicable also if an accident occurs and the car is found to be used for any illegal purposes not covered by the law.

Lastly, any damage caused by nuclear risks is not covered.